AMENDED
AND RESTATED SECURITY AGREEMENT

     

    THIS AMENDED AND RESTATED SECURITY
AGREEMENT (this “Agreement”), dated as of
December 2, 2009, is made by and among Protalex, Inc. a Delaware corporation,
(the “Grantor”), and
Niobe Ventures, LLC (the “Secured Party”) and amends and
restates in its entirety the Security Agreement dated as of November 11, 2009 by
and between Grantor and Secured Party.

     

    WHEREAS, the Grantor has
issued to the Secured Party a senior secured convertible promissory note in the
principal amount of One Million Dollars ($1,000,000) (such note, as amended or
modified from time to time, the “First Note”).

     

    WHEREAS, the Grantor has
agreed to make additional loans to the Secured Party (the “Additional Loans”) of
up to Two Million Dollars ($2,000,000) pursuant to a Credit Facility Agreement
dated as of December 1, 2009, each such Additional Loan to be represented by a
Senior Secured Convertible Promissory Note similar to the Note (a “CF Note”).

     

    WHEREAS, the Grantor and the
Secured Party have agreed to execute and deliver this Agreement, among other
things, to secure the obligations of the Grantor under the First Note and the CF
Notes (hereinafter collectively the “Notes”).

     

    The
Grantor and the Secured Party hereby agree as follows:

     

    SECTION 1.  Definitions;
Interpretation.

     

    (a)     
As used in this Agreement, the following terms shall have the following
meanings:

     

    “Collateral” means the property
described on Exhibit
A attached hereto and all Negotiable Collateral and Intellectual Property
to the extent not described on Exhibit A, except (i)
to the extent any such property is nonassignable by its terms without the
consent of the licensor thereof or another party (but only to the extent such
prohibition on transfer is enforceable under applicable law, including, without
limitation, applicable provisions of the New York Uniform
Commercial Code as amended or supplemented from time to time.), or (ii) the
granting of a security interest in such property is contrary to applicable law,
provided that upon the cessation of any such restriction or prohibition, such
property shall automatically become part of the Collateral.

     

    “Copyrights” means any and all
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished and whether or not the same also constitutes a trade
secret, now or hereafter existing, created, acquired or held.

     

    “Event of Default” has the
meaning set forth in the Notes.

     

    “Intellectual Property” means
all of Grantor’s right, title, and interest in and to the following, except to
the extent any security interest hereunder would cause any application for a
Trademark to be deemed invalidated, canceled or abandoned due to the grant
and/or enforcement of such security interest, including, without limitation, all
U.S. trademark applications that are based on an intent-to-use, unless and until
such time that the grant and/or enforcement of the security interest will not
affect the status or validity of such trademark:


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
            	
              (a)

            	
              Copyrights,
      Trademarks and Patents;

            


    

     

    
      	
               
      

            	
              (b)

            	
              and
      all trade secrets, and any and all intellectual property rights in
      computer software and computer software products now or hereafter
      existing, created, acquired or
held;

            


    

     

    
      	
               
      

            	
              (c)

            	
              and
      all design rights which may be available to Grantor now or hereafter
      existing, created, acquired or
held;

            


    

     

    
      	
               
      

            	
              (d)

            	
              and
      all claims for damages by way of past, present and future infringement of
      any of the rights included above, with the right, but not the obligation,
      to sue for and collect such damages for said use or infringement of the
      intellectual property rights identified
above;

            


    

     

    
      	
               
      

            	
              (e)

            	
              licenses
      or other rights to use any of the Copyrights, Patents or Trademarks, and
      all license fees and royalties arising from such use to the extent
      permitted by such license or
rights;

            


    

     

    
      	
               
      

            	
              (f)

            	
              amendments,
      renewals and extensions of any of the Copyrights, Trademarks or Patents;
      and

            


    

     

    
      	
               
      

            	
              (g)

            	
              proceeds
      and products of the foregoing, including without limitation all payments
      under insurance or any indemnity or warranty payable in respect of any of
      the foregoing.

            


    

     

    “Lien” means any mortgage, deed
of trust, pledge, security interest, assignment, deposit arrangement, charge or
encumbrance, lien, or other type of preferential arrangement.

     

    “Obligations” means the
indebtedness, liabilities and other obligations of the Grantor to the Secured
Party under Notes including without limitation, the unpaid principal of the
Notes and all interest accrued thereon payable by the Grantor to the Secured
Party thereunder or in connection therewith.

     

    “Patents” means all patents,
patent applications and like protections, including, without limitation,
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.

     

    “Permitted Liens” mean: (i)
Liens in favor of the Secured Party in respect of the Obligations hereunder;
(ii) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and which are adequately reserved for in accordance with GAAP; (iii)
Liens of materialmen, mechanics, warehousemen, carriers or employees or other
like Liens arising in the ordinary course of business and securing obligations
either not delinquent or being contested in good faith by appropriate
proceedings; (iv) Liens consisting of deposits or pledges to secure the payment
of worker’s compensation, unemployment insurance or other social security
benefits or obligations, or to secure the performance of bids, trade contracts,
leases, public or statutory obligations, surety or appeal bonds or other
obligations of a like nature incurred in the ordinary course of business; (v)
easements, rights of way, servitudes or zoning or building restrictions and
other minor encumbrances on real property and irregularities in the title to
such property which do not in the aggregate materially impair the use or value
of such property or risk the loss or forfeiture of title thereto; and (vi) Liens
upon or in any equipment now or hereafter acquired or held by the Grantor to
secure the purchase price of such equipment or indebtedness incurred solely for
the purpose of financing or refinancing the acquisition of such equipment,
provided that the Lien is confined solely to the equipment so acquired and
accessions thereon and proceeds thereof.


    
      
         


      

      
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    “Person” means an individual,
corporation, partnership, joint venture, trust, unincorporated organization,
governmental agency or authority, or any other entity of whatever
nature.

     

    “Trademarks” means any
trademark and service mark rights, whether registered or not, applications to
register and registrations of the same and like protections, and the parts of
the goodwill of the business connected with the use of and symbolized by such
marks.

     

    “UCC” means the Uniform
Commercial Code as the same may, from time to time, be in effect in the State of
New York.

     

    (b)     Where
applicable and except as otherwise defined herein, terms used in this Agreement
shall have the meanings assigned to them in the UCC.

     

    (c)      In
this Agreement, (i) the meaning of defined terms shall be equally
applicable to both the singular and plural forms of the terms defined;
(ii) the captions and headings are for convenience of reference only and
shall not affect the construction of this Agreement; (iii) the words “hereof,”
“herein,” “hereto,” “hereunder” and the like mean and refer to this Agreement as
a whole and not merely to the specific Article, Section, subsection, paragraph
or clause in which the respective word appears; (iv) the words “including,”
“includes” and “include” shall be deemed to be followed by the words “without
limitation;” and (v) the term “or” shall not be limiting.

     

    SECTION 2.  Security
Interest.

     

    (a)           Subject
to the Permitted Liens, as security for the payment and performance of the
Obligations, the Grantor hereby pledges, assigns and grants to the Secured Party
a security interest in all of the Grantor’s right, title and interest in, to and
under all of the Collateral (other than as set forth in Section 2(b)
hereof).

     

    (b)           Notwithstanding
the foregoing, except for fixtures (to the extent covered by Article 9 of
the UCC), such grant of a security interest shall not extend to, and the term
“Collateral” shall not include, any asset which would be real property under the
law of the jurisdiction in which it is located.

     

    (c)           This
Agreement shall create a continuing security interest in the Collateral that
shall remain in effect until terminated in accordance with the provisions
hereof.

     

    SECTION 3. Financing Statements,
Etc.  The Grantor hereby authorizes the Secured Party to file
(with a copy thereof to be provided to the Grantor contemporaneously therewith),
at any time and from time to time thereafter, all financing statements,
financing statement assignments, continuation financing statements, and UCC
filings, in form reasonably satisfactory to the Secured Party.  The
Grantor shall execute and deliver and shall take all other action, as the
Secured Party may reasonably request, to perfect and continue perfected,
maintain the priority of or provide notice of the security interest of the
Secured Party in the Collateral (subject to the terms hereof) and to accomplish
the purposes of this Agreement.  Without limiting the generality of
the foregoing, the Grantor ratifies and authorizes the filing by the Secured
Party of any financing statements filed prior to the date hereof that accomplish
the purposes of this Agreement.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    SECTION 4. Representations and
Warranties.  The Grantor represents and warrants to the Secured
Party that:

     

    (a)           Grantor
is a business entity duly formed, validly existing and in good standing under
the law of the jurisdiction of its organization and has all requisite power and
authority to execute, deliver and perform its obligations under this
Agreement.

     

    (b)           The
execution, delivery and performance by the Grantor of this Agreement has been
duly authorized by all necessary corporate action of the Grantor, and this
Agreement constitutes the legal, valid and binding obligation of the Grantor,
enforceable against the Grantor in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws of general application affecting enforcement of
creditors’ rights generally, as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable
remedies.

     

    (c)           Except
for the filing of appropriate financing statements, no authorization, consent,
approval, license, exemption of, or filing or registration with, any
governmental authority or agency, or approval or consent of any other Person, is
required for the due execution, delivery or performance by the Grantor of this
Agreement unless the same has already been obtained or is being obtained
simultaneously in connection herewith.

     

    (d)           This
Agreement creates a security interest that is enforceable against the Collateral
in which the Grantor now has rights and will create a security interest that is
enforceable against the Collateral in which the Grantor hereafter acquires
rights at the time the Grantor acquires any such rights.

     

    (e)           The
Grantor has the right and power to grant the security interests in the
Collateral to the Secured Party in the Collateral, and the Grantor is the sole
and complete owner of the Collateral, free from any Lien other than the
Permitted Liens.

     

    SECTION 5.  Covenants of the
Grantor.  Until this Agreement has terminated in accordance
with the terms hereof, the Grantor agrees to do the following:

     

    (a)           The
Grantor shall give prompt written notice to the Secured Party (and in any event
not later than ten (10) days following any change described below in this
subsection) of: (i) any change in the Grantor’s name; (ii) any changes in the
Grantor’s identity or structure in any manner which might make any financing
statement filed hereunder incorrect or misleading; or (iii) any change in
jurisdiction of organization; provided that the
Grantor shall not locate any Collateral outside of the United States nor shall
the Grantor change its jurisdiction of organization to a jurisdiction outside of
the United States.

     

    (b)           The
Grantor shall not surrender or lose possession of, sell, lease, rent or
otherwise dispose of or transfer any of the Collateral or any right or interest
therein, except in the ordinary course of business consistent with past practice
and except to the extent of equipment that is obsolete or no longer useful to
its business.

     

    (c)           The
Grantor shall keep the Collateral free of all Liens except the Permitted
Liens.


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    SECTION 6.  Collection of
Accounts.  The Grantor shall endeavor in the first instance
diligently to collect all amounts due or to become due on or with respect to the
accounts and other rights to payment.

     

    SECTION 7. Authorization; Secured Party
Appointed Attorney-in-Fact.  The Secured Party shall have the
right, to, in the name of the Grantor, or in the name of the Secured Party or
otherwise, upon notice to, but without the requirement of assent by the Grantor,
and the Grantor hereby constitutes and appoints the Secured Party (and any
employees or agents designated by a Secured Party) as the Grantor’s true and
lawful attorney-in-fact, with full power and authority to:  (i)
assert, adjust, sue for, compromise or release any claims under any policies of
insurance; and (ii), execute any and all such other documents and instruments,
and do any and all acts and things for and on behalf of the Grantor, that such
Secured Party may deem necessary or advisable to maintain, protect, realize upon
and preserve the Collateral and the Secured Party’s security interests therein
and to accomplish the purposes of this Agreement.  The Secured Party
agrees that, except upon and during the continuance of an Event of Default, it
shall not exercise the power of attorney, or any rights granted to the Secured
Party under this Section 7.  The foregoing power of attorney is
coupled with an interest and is irrevocable so long as the Obligations have not
been indefeasibly paid and performed in full and the commitments not
terminated.  The Grantor hereby ratifies, to the extent permitted by
law, all that the Secured Party shall lawfully and in good faith do or cause to
be done by virtue of and in compliance with this Section 7.

     

    SECTION 8. Remedies.

     

    (a)           Upon
the occurrence and during the continuance of an Event of Default, the Secured
Party shall have, in addition to all other rights and remedies granted to the
Secured Party in this Agreement or the Notes, all rights and remedies of a
secured party under the UCC and other applicable laws. Without limiting the
generality of the foregoing, upon the occurrence and during the continuance of
an Event of Default, the Secured Party may sell, resell, lease, use, assign,
license, sublicense, transfer or otherwise dispose of any or all of the
Collateral in its then condition or following any commercially reasonable
preparation or processing (utilizing in connection therewith any of Grantor’s
assets, without charge or liability to any Secured Party therefor) at public or
private sale, by one or more contracts, in one or more parcels, at the same or
different times, for cash or credit, or for future delivery without assumption
of any credit risk, all as the Secured Party deem advisable; provided, however,
that the Grantor shall be credited with the net proceeds of sale only when such
proceeds are finally collected by the Secured Party.  Each Secured
Party shall have the right upon any such public sale, and, to the extent
permitted by law, upon any such private sale, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption, which
right or equity of redemption the Grantor hereby releases, to the extent
permitted by law.  The Grantor hereby agrees that the sending of
notice by ordinary mail, postage prepaid, to the address of the Grantor set
forth herein or subsequent address that the Grantor provides to the Secured
Party in writing, of the place and time of any public sale or of the time after
which any private sale or other intended disposition is to be made, shall be
deemed reasonable notice thereof if such notice is sent ten (10) business days
prior to the date of such sale or other disposition or the date on or after
which such sale or other disposition may occur.

     

    (b)           The
cash proceeds actually received from the sale or other disposition or collection
of the Collateral, and any other amounts received in respect of the Collateral
the application of which is not otherwise provided for herein shall be applied
first, to the
payment of the reasonable costs and expenses of the Secured Party in exercising
or enforcing their rights hereunder and in collecting or attempting to collect
any of the Collateral, and to the payment of all other amounts payable to the
Secured Party pursuant to Section 12 hereof; and second, to the
payment of the Obligations.  Any surplus thereof that exists after
payment and performance in full of the Obligations shall be promptly paid over
to the Grantor or otherwise disposed of in accordance with the UCC or other
applicable law.  The Grantor shall remain liable to the Secured Party
for any deficiency that exists after any sale or other disposition or collection
of the Collateral.


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    SECTION 9.  Certain
Waivers.

     

    (a)           The
Grantor waives, to the fullest extent permitted by law:  (i) any
right of redemption with respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshalling of the Collateral or other
collateral or security for the Obligations; (ii) any right to require the
Secured Party to:  (A) proceed against any Person,
(B) exhaust any other collateral or security for any of the Obligations,
(C) pursue any remedy in the Secured Party’s power or (D) except as
provided herein or in any of the Notes, make or give any presentments, demands
for performance, notices of nonperformance, protests, notices of protests or
notices of dishonor in connection with any of the Collateral; and (iii) all
claims, damages and demands against the Secured Party arising out of the
repossession, retention, sale or application of the proceeds of any sale of the
Collateral.

     

    SECTION 10. Notices.  All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered personally or sent by
nationally-recognized overnight courier or by registered or certified mail,
postage prepaid, return receipt requested or by facsimile, with confirmation as
provided above addressed as follows:

     

    If to Grantor:

    


    Protalex, Inc.

    145 Union Square Drive

    New Hope, PA 18938

    Attention:  Chief Financial
Officer

    


    With copies to

    


    Morse,
Zelnick, Rose & Lander LLP

    405 Park
Avenue, Suite 1401

    New York,
NY 10022

    Attention:  Kenneth
S. Rose, Esq.

    Fax:  212-208-6809

    


    If to the Secured
Party:

    


    Niobe Ventures, LLC

    c/o Arnold P. Kling

    712 Fifth Avenue, 11th
Floor

    New York, NY 10019

    Attention: Arnold Kling, Managing
Member

    Fax:  212-713-1818


    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    With a copy to

    


    Morse,
Zelnick, Rose & Lander LLP

    405 Park
Avenue, Suite 1401

    New York,
NY  10022

    Attention:  Kenneth
S. Rose, Esq.

    Fax:  212-838-5030

    


    SECTION 11. No Waiver; Cumulative
Remedies.  No failure on the part of the Secured Party to
exercise, and no delay in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights and remedies under this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges that
may otherwise be available to the Secured Party.

     

    SECTION 12. Costs and
Expenses.  The Grantor agrees to pay all reasonable costs and
expenses of the Secured Party, in connection with the enforcement and
preservation of any rights or interests under, this Agreement and the
protection, sale or collection of, or other realization upon, any of the
Collateral, including all reasonable expenses of taking, collecting, holding,
sorting, handling, preparing for sale, selling or the like and other such
expenses of sales and collections of the Collateral.

     

    SECTION 13. Binding
Effect.  This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Grantor, the Secured Party and their
respective successors and assigns.

     

    SECTION 14. Governing Law. This
Agreement shall be governed by and construed under the laws of the State of New
York without regard to principles of conflict of laws.

     

    SECTION 15. Entire Agreement;
Amendment.  This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof and shall not be amended
except by the written agreement of the Grantor and the Secured
Party.  Notwithstanding the foregoing, this Agreement may not be
amended and any term hereunder may not be waived with respect to any Secured
Party without the written consent of such Secured Party unless such amendment or
waiver applies to all Secured Party in the same fashion.

     

    SECTION 16. Severability.  Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be valid, legal and enforceable under all applicable laws and
regulations.  If, however, any provision of this Agreement shall be
invalid, illegal or unenforceable under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be invalid, illegal or unenforceable only to
the extent of such invalidity, illegality or limitation on enforceability
without affecting the remaining provisions of this Agreement, or the validity,
legality or enforceability of such provision in any other
jurisdiction.

     

    SECTION 17. Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.


    
      
         


      

      
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    SECTION 18. Termination.  Upon
the payment and performance in full of all Obligations, this Agreement shall
terminate and the Secured Party shall promptly, at the cost of the Grantor,
execute and deliver to the Grantor such documents and instruments reasonably
requested by the Grantor as shall be necessary to evidence termination of all
security interests given by the Grantor to the Secured Party hereunder;
provided, however, that the obligations of the Grantor under Section 12 hereof
shall survive such termination.

    


    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of the
date first above written.

    


    
      
        
          
            
              	 
      	
                      GRANTOR:

                    
	 
      	 
      
	 
      	
                      PROTALEX,
      INC.

                    
	 	 
	 
      	
                      By:

                    	 
      
	 
      	 
      	
                      Kirk
      M. Warshaw, Chief Financial Officer

                    
	 
      	 
      	 
      
	 
      	
                      NIOBE
      VENTURES, LLC

                    
	 
      	 
      	 
      
	 
      	
                      By:

                    	 
      
	 
      	 
      	
                      Arnold
      P. Kling,
Manager

                    


            

          

        

      

    

     

    
      
         


      

      
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    EXHIBIT
A

     

    COLLATERAL
DESCRIPTION ATTACHMENT TO SECURITY AGREEMENT

     

    
      
        
          	
                  DEBTOR

                	 
      	
                  PROTALEX,
      INC., a Delaware corporation

                
	 
      	 
      	 
      
	
                  SECURED
      PARTY:

                	 
      	
                  Niobe
      Ventures, LLC

                


        

      

    

     

    All
personal property of Grantor (herein referred to as “Grantor” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located including, without limitation:

     

    
      	
              (a)

            	
              all
      accounts (including health-care-insurance receivables), chattel paper
      (including tangible and electronic chattel paper), deposit accounts,
      documents (including negotiable documents), equipment (including all
      accessions and additions thereto), general intangibles (including payment
      intangibles and software), goods (including fixtures), instruments
      (including promissory notes), inventory (including all goods held for sale
      or lease or to be furnished under a contract of service, and including
      returns and repossessions), investment property (including securities and
      securities entitlements), letter of credit rights, money, and all
      of Grantor’s books and records with respect to any of the foregoing,
      and the computers and equipment containing said books and records;
      provided that notwithstanding the foregoing, "Collateral" shall not
      include more than 65% of the stock of any subsidiary that is not
      incorporated, formed or organized under the laws of the United States, any
      state thereof or the District of Columbia (a "Foreign Subsidiary"), or
      more than 65% of the stock of any subsidiary substantially all of the
      assets of which are stock in Foreign
  Subsidiaries;

            


    

     

    
      	
              (b)

            	
              all
      common law and statutory copyrights and copyright registrations,
      applications for registration, now existing or hereafter arising, in the
      United States of America or in any foreign jurisdiction, obtained or to be
      obtained on or in connection with any of the foregoing, or any parts
      thereof or any underlying or component elements of any of the foregoing,
      together with the right to copyright and all rights to renew or extend
      such copyrights and the right (but not the obligation) of Secured Party to
      sue in their own name and/or in the name of the Debtor for past,
      present and future infringements of
copyright;

            


    

     

    
      	
              (c)

            	
              all
      trademarks, service marks, trade names and service names and the goodwill
      associated therewith, together with the right to trademark and all rights
      to renew or extend such trademarks and the right (but not the obligation)
      of Secured Party to sue in their own name and/or in the name of the
      Debtor for past, present and future infringements of
      trademark;

            


    

     

    
      	
              (d)

            	
              all
      (i) patents and patent applications filed in the United States Patent and
      Trademark Office or any similar office of any foreign jurisdiction, and
      interests under patent license agreements, including, without limitation,
      the inventions and improvements described and claimed therein, (ii)
      licenses pertaining to any patent whether Debtor is licensor
      or  licensee, (iii) income, royalties, damages, payments,
      accounts and accounts receivable now or hereafter due and/or payable under
      and with respect thereto, including, without limitation, damages and
      payments for past, present or future infringements thereof, (iv) right
      (but not the obligation) to sue in the name of Debtor and/or in the name
      of Secured Party for past, present and future infringements thereof, (v)
      rights corresponding thereto throughout the world in all jurisdictions in
      which such patents have been issued or applied for, and (vi) reissues,
      divisions, continuations, renewals, extensions and continuations-in-part
      with respect to any of the foregoing;
and

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              (e)

            	
              any
      and all cash proceeds and/or non-cash proceeds of any of the foregoing,
      including, without limitation, insurance proceeds, and all supporting
      obligations and the security therefor or for any right to
      payment.  All terms above have the meanings given to them in
      the New York Uniform Commercial Code, as amended or supplemented
      from time to time.